Film Production Hot Costs – Webinars?

A young man, newly starting as a Key Production Accountant, asked me about Hot Costs. Below is the response that I wrote to him. It occurred to me that a lot of people have asked for a template of the Hot Costs that I use and perhaps there is a demand for a webinar on Hot Costs. Have a look at the info below and please give me your comments.

_____________________________________________________________________________

Hi, Erik. Helene passed along to me your emailed questions. First of all, I’d like to congratulate you on your new key accountant position.

1. On the Hot Cost template that I sent you the 0.74 is a conversion rate of CN$ to US$. For your purposes make it a 1.

2. TA ia “Turnaround”, a common term for “Rest Violations”.

On your question about doing a webinar on Hot Costs – I like the suggestion.

Background of Hot Costs:

The basic concept behind any hot cost is to estimate the cost of the actual day with the budgeted day. Labor is the biggest area looked at. In any labor calculation (cast or crew) you’re looking at:

– Overtime

– Meal Penalties

– and, Rest Violations (Turnaround).

 Over the years I’ve worked out this particular format for myself, but it doesn’t have to be as elaborate. For instance, when Hot Costs first started to be used, in the early 90’s, myself and the UPM would sit together and rough it out with a few pencil scratch marks on the back of the daily production report (i.e. the average time for all grips and elec’s was 14 pay hours x 11 of them at an average rate of pay, then compare that result with the budgeted number of pay hours x the same average rate of pay. We’d do that for each department, as well as the drivers, add it up and say – there’s your number).

 However, as the majors grew more and more cost conscious we were forced to become more and more detailed oriented. Also, some UPM’s and studios will challenge your Hot Cost results, so it behooves the production accountant to have a tidy schedule ready to answer their questions.

Film Payroll and Hot Costs:

I’ve never done a workshop on Hot Costs, only because you first need to know Film Payroll, then you need to know “If” statements in Excel. So, the course on “how to do Hot Costs” reduces to either, or both, a film payroll workshop or Excel programming workshop.

 Regardless of your geographic location, I teach all the fundamentals of film payroll (as well as film accounting, managing film budgets, etc). The unions covered are:

SAG, DGA, IATSE Low National Budget and IATSE Area Standards rules. (i.e. not the West Coast IATSE Basic Agreement, nor the New York locals). NOTE: The IATSE Basic Agreement as applied on the West Coast, and the New York union rules, are very similar, but there is variation among the Basic Agreement Locals which can be looked up once you understand the basics of film payroll.

Let’s see if others are interested:

Having a webinar on Hot Costs is a good idea, though. Hopefully, those who attend will already have a handshake idea of film payroll, as well as a good grasp of Excel.

 I’ll propose it on my blog and see what sort of response I get.

 Thx for your kind words about the usefulness of the recorded videos of the on-line webinars. I’m pleased that they helped you.

Best / John

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About filmproduction
I have worked in the film production industry since 1985, working on over 50 different productions of every size in 6 different countries. My self-published book, "Walk The Talk" is written in an easy to read manner for film students and working professionals who haven't had the chance to learn how to 'Direct the Money'.

5 Responses to Film Production Hot Costs – Webinars?

  1. Jeff says:

    This reminded me of your post in Feb 2010 about hot cost, I asked for a template but never received one because I forgot to tell you what area! The answer to that is all areas!

    Also I would be interested in a webinar and a template too!

  2. Nick says:

    John,

    After reading almost all of your posts on your site I have since started to follow you on twitter and would love to view a webinar. My name is Nick and I am 21 years old. I have just graduated with an accounting degree and have since accepted a job at a top 20 accounting firm. In the next year I will be pursing my CPA. With all of that on my plate I have still found the time to line produce for a $40,000 film and will be taking a role as the lead production accountant and line producer on a $200,000 film this coming fall. It is an anthology and will be filming over the course of 8 months. You seem like a highly intelligent individual especially in this field of interest. I wanted to see if I would be able to pick your brain on the topics of film accounting and line production. I still consider myself a novice in the profession yet I could see it becoming a large part of my life. I have a few questions I would love to ask you. Hopefully we can get in touch via email. Please let me know if this is possible and I look forward to speaking with you.

    Thank you,

    Nick

  3. karen says:

    Hi John, I’d be interested to know if you ever did the hot costing webinar – I mostly do over seas work, been firsting for a long time, but am starting to key small things, and hot cost is just something I never really got to. so if you’re doing one let me know!

    • Hi, there. Sorry for the late response. Just now catching up with a lot of communication. Yeah…. the good old hot coast. I bet I get about 10 emails a month asking about hot costs. I usually send off a template and never hear from the person again. You see, the problem with hot costs is that first you need to be quite proficient in Excel, you need to be able to manage a film budget, then you have to be very knowledgeable about payroll rules in your area. Overseas I think the payroll is a lot less complicated (at least it was in Germany, Spain, England and S. Africa) so it should be a simple enough task for you. Essentially a Hot Cost is comparing the previous day;s labor costs with the budgeted day’s labor costs. You find the difference and report it as (Over) or Under Budget. (In North America you should also be able to identify the Overtime, the Rest Period Violations and the Meal Penalties within that Over/Under amount).

      I hope that helps you. If I get enough inquiries like yours I’ll record an hour’s instruction at a time and have it available for the oublic to see it.

      Best / John

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